clariant corporation case

8/14/2019 Clariant Corporation Case

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CLARIANT CORPORATION

CASESUBMITTED BY:HUNNY GOYAL

PARTH SHAH

NILAY THAKKAR


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Introduction

Clariant international limited was formed in 1995.

It formed with the spun off of three acquisitions.

These divisions are Sandoz with sales of approximately 1.5 billion.

Hoechst-Celanese added to mix in 1997 with sales of 5.5 billion.

NAFTA region accounts for 1.1 billion.


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Clariant 6 Global Divisions

TLP( textile, leather, paper) chemicals for process

P&A( Pigments and Additives) makes colorants and functional additives

FUN( functional chemicals) produces a plethora and magic molecules

LSE ( life sciences and electronics) its serves the need of electronics and

pharmaceuticals industries

MB ( master batches) custom blends pigments and other additives for colorplastics

CEP( cellulose ethers and polymeriser) provides special feed-stock chemicalsplastics processing


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Chemical Industry Background

Two type of chemicals are available-

1.Commodity chemical

2.Specialty chemical

Commodity chemical stand as a daily utilized kind of product including

chemical which holds for 83% of total market share.

Mature Commodity market are primarily driven by price, service, technicalsupport, company relationship.

Specialty chemical are often willing in invest in research and development ofperformance and cost to meet the immediate need.


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Specialty Chemicals

This is the field in which the Clariant corporation are doing business

Specialty chemicals are used in many products we encounter every day.

like,-

1.Pigments in paint

2.Plastic

3.Leather in cars and in Cosmetics

4.Photo-resists in video Displays

5.Agro Chemicals for food etc.


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Problem Finding

In Sep 2000, when VP Vincent Thompson of Clariant Corporation gone throughthe Sales growth & Contribution growth margin of the NAFTA arm of Clariant

he was frowned by seeing the continued volatility in their most promisingbusiness area.

He ended his review with the question of how Clariant could fully developtheir potential in meeting their goals of Sales & Contribution margin.

Vincent Thompson wanted to redefine the Marketing & Sales to tackle suchissue by Redesigning their sales force into cross-divisional account teams thatcould be assigned to companys most profitable customers which going to cost

their time & money heavily.

Their employees also suggested him other alternatives like Training, Financialincentives which Vincent is going to consider.


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Cont..

Beside this President of Clariant Corporation, David Lawrence outlined threepronged strategies to achieve both Sales & Profit performances:

A. Sales growth through strategic acquisitions to achieve targeted growth inhigh- margin segments

B. Sales growth generated by cross-divisional sales of multiple Clariant lines

to key, high-potential customers

C. Improving margins by emphasizing sales of higher-margin specialty

products over the more established "semi-specialty" products (those nearingcommodity status).


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Structure of Specialty Chemical Industry

Tier 1

Annual Salesbetween morethan 10

billions. Specializing inSpecificSegments orUser segments.

Tier 2

Annual Salesbetween 3-5billions.

Focusing onParticularportfolio ofspecialtychemicals.

Tier 3

Annual Salesbetween 1-2billions.

They are havingnarrower rangeof productsofferings thanTier 2.


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Cont..

Clariant Corporation fall under Tier 2 Class of industries.

They are in the Precarious situation because they compete fiercely on price

when a major account is up for grabs.

One of our managers characterized our position as being caught "betweena herd of elephants and a pool of sharks."


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Strategies Implementation

In implementing these strategies, especially the cross-divisional salesstrategy. Clariant had invested significant time, energy, and money into the

creation of cross- divisional product understanding among the variousbusiness units. Significant training investments were already being made .in

the various sales forces. Technologies were being implemented, includingcentral databases of product information, product con- tact information,

and "center of excellence teams."

To capture these potential cross-divisional opportunities, whichoften arose from a customer's pressing needs for new approaches toproduct development, a fledgling national accounts system was under

development and had resulted in several promising contacts withhigh-potential customers.


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Marketing & Sales

Sales department is provided as a annual sales objectives that make sense tothe production department to be manufacturing of the products.

And also it make increase the profitability.

Globalization-

They having global business unit, each one having own sales force.

each of that separated with product line, user line , industry line etc. All unit are divided as further geographically.


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Cont..

They having national accounts of the major customer

They donttake the customer like they own customer as a local business unitbecause there is many competitor with various kind of product available.

Salesman of Clariant spent less time to Identifying prospects for new businessfor Clariant beyond product line.

And they spent most time in Generating new business for product line.

Salesman incentives-- Seventy-five percent of our upper-management bonuses are tied to NorthAmerican divisional sales, earnings, return on sales' and net working capitalperformance.

- Twenty-five percent of our bonuses relate to the same performance metricsfor global division


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Cont..

They having national accounts of the major customer

They donttake the customer like they own customer as a local business unit.

Because there is many competitor with various kind of product available


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Customers Expectation

In 2000, Survey of 26 Clariant Customers are revealed the following things:

22 of 26 described closer relationships with the chemical suppliers.

Most of them laid importance on Quality and then on Service and last on

Pricing. Most of also said they are willing to pay more price for the quality &service.

20 of 26 are prefer to work with the current chemical suppliers.

24 of 26 want new & additional product opportunities to come from the

supplier representatives.

On the view of technology advancement, Half replied that they would

purchase commodity chemicals from e-commerce market and they also toldthat technology should facilitate the relationship not to replace it.


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Cont..

Large Clients also want to integrate the supplier into the product-development process to shorten timetables and to streamline problem

solving.


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Thank You

clariant corporation case

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